Controversy over measures to promote employment of older people

The social security finance bill, which was adopted at the end of November 2008, includes several new measures for keeping older people in employment. These provisions reflect decisions made by the French government in the framework of recent social partner discussions on pension reform. However, the new legislation has met with strong negative reactions from most of the social partners, the political opposition parties and other relevant actors.

The social security finance bill, which was adopted in France on 27 November 2008, includes several new provisions for keeping older people in employment. These measures reflect government decisions made in the framework of the ‘Rendez-vous 2008’ discussions with the social partners on pension reform (FR0807019I), as well as some parliamentary amendments. Thus, although the bill originally abolished employer-instigated retirement, the French parliament decided to keep this form of termination of employment in a modified form.

Content of new legislation

The new bill stipulates a broad range of initiatives, as outlined under the following headings.

Increase in pension contribution years

The new legislation allows for a gradual increase in the number of contribution years required for a full retirement pension, from 161 three-monthly contributions for employees born in 1949 to 164 for those born in 1952.

Company agreement or action plan

From 1 January 2010, companies and public establishments that have at least 50 employees will be obliged to pay a penalty of 1% of their wage bill if they are not covered by a company agreement or an action plan regarding the employment of older employees (FR0811039I). The payment will go to the National Old Age Insurance Fund (Caisse nationale d’assurance vieillesse, CNAV).

The company-level collective agreement or action plan must include:

  • a quantitative target regarding keeping older people in employment or recruiting them;
  • measures in at least three areas of action chosen from a list set out in a decree;
  • strategies for monitoring these actions.

Career planning and training

In addition, the new legislation sets out that negotiations at sectoral level should take place every three years on the employment of older people, which must also cover career planning and training.

Extending work career

On the basis of the new bill, it will be possible to combine employment and a retirement pension (cumul emploi-retraite) without any limitations from the age of 60 years for those who have a full pension contributions record and from the age of 65 years for everyone.

Furthermore, people who choose to work longer will be entitled to a higher pension (surcôte). From 1 January 2009 onwards, the amount of the pension increases by 1.25% per additional three-monthly contribution, amounting to 5% a year in the private sector. Since January 2004, the increase was 0.75% per additional three-monthly contribution during the first year, rising to 1% per quarter in subsequent years and 1.25% after the age of 65 years. The pension total has also been increased from 0.75% to 1.25% per additional three-monthly contribution in the civil service, up to a maximum of 20 three-monthly contributions.

Postponement of retirement age

Likewise, the new bill means that employees can postpone their retirement age if they wish.

  • From 1 January 2010, employers will only be able to oblige employees to retire from the age of 70 years onwards. Between 65 and 70 years, employers will have to ask employees at least three months before their birthday whether they wish to retire. If the answer is no (within a time limit of one month) or if the employer does not respect the prescribed notice, employers will not be able to compel the workers to retire for a year.
  • Pilots (from 2010 onwards) and flight staff (from 2009 onwards) will be able to continue working until 65 years, if they so wish. Up to now, pilots were obliged to retire at 60 years and flight staff at 55 years.
  • From 1 January 2010, civil and public servants – who so wish – will be able to continue working beyond previously set limits of 65 years on condition that they are fit to do so.

The programme of gradual retirement will continue until December 2009.

Considerable negative reaction to proposals

At the beginning of October 2008, the boards of the National Employed Workers’ Sickness Insurance Fund (Caisse nationale d’assurance maladie des travailleurs salariés, CNAMTS), the National Child Benefit Fund (Caisse nationale d’allocations familiales, CNAF) and CNAV all gave a negative consultative opinion on the draft text.

The amendment on the possibility of continuing to work until 70 years led to an outcry from trade unions and political opposition parties. However, the government considered that it was a matter of putting an end to ‘guillotine’ retirement – that is, unilateral employer-instigated retirement at a certain age. Nevertheless, the opposition denounced it as an ‘insidious postponement of retirement age’.

President of the Movement of French Enterprises (Mouvement des entreprises de France, MEDEF), Laurence Parisot, described this particular amendment as ‘an initial historic step’ and welcomed ‘the possibility of changing everyone’s perception of older people’s work’. However, many employers – as well as the General Confederation of Small and Medium-sized Enterprises (Confédération générale des petites et moyennes entreprises, CGPME) and the Craftwork Employers’ Association (Union professionnelle artisanale, UPA), which represent small companies – criticised this provision. CGPME rejected it as an unbalanced measure putting companies at a disadvantage and considers that ‘obliging employers, against their will, to keep employees until 70 would lead to all kinds of avoidance’.

The Socialist Party (Parti Socialiste, PS) lodged an appeal, as it considers that this article violates the right to health, rest and equality. However, on 11 December 2008, the Constitutional Council (Conseil constitutionnel) validated this measure. It judged that it is a ‘voluntary mechanism regarding economic activity up to the age of 70 and does not modify the legal retirement age’.

Meanwhile, the amendment raising the age limit for flying for pilots and flight attendants led to four days of strike action at Air France. The President of the National Union of Airline Pilots (Syndicat national des pilotes de ligne, SNPL), Jocelyn Smykowski, criticised ‘government dogmatism’, describing the measure concerning his profession as ‘posturing in the context of the law on older people’. The trade unions did not succeed in having the article withdrawn; nonetheless, the government amended it by ‘offering the guarantee to be able to stop their activity at any moment with the same financial conditions as already exist’.

Commentary

The introduction of a financial penalty for companies that have not signed a collective agreement or drawn up an action plan should lead to a wave of negotiations between now and the end of 2010. However, the implementing decree (décret d’application) will essentially determine the real impact of such a measure, which is currently an obligation regarding means rather than results.

The impact of the current recession on employment could push this obligation into the background or even greatly limit companies’ room for manoeuvre. The 0.3% increase in pension contributions, which was planned for 2009, has already been indefinitely postponed, as the social partners did not agree on reducing unemployment insurance contributions.

Annie Jolivet, Institute for Economic and Social Research (IRES)

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